Biden accuses China of ‘cheating’ on trade, imposes new tariffs
PRESIDENT Joe Biden unveiled sweeping tariff hikes on a range of Chinese imports, in an election-year bid to bolster domestic manufacturing in critical industries.
The US president cast the move as a necessary action to protect US workers and businesses from companies that he accused of stealing, cheating and dumping underpriced goods into international markets.
Biden is raising levies on semiconductors, batteries, solar cells, and critical minerals, in addition to previously reported increases on steel, aluminium and electric vehicles (EVs). The changes are projected to affect around US$18 billion in current annual imports, the White House said.
“When you make tactics like this, you are not competing, it’s not competition, it’s cheating. And we have seen damage here in America,” Biden said on Tuesday (May 14) at a White House Rose Garden event.
The moves represent Biden’s most comprehensive update to China tariffs first imposed by his predecessor, former president Donald Trump, and a recognition that a hawkish approach to trade with Beijing remains popular with US voters. None of Trump’s tariffs will be reduced. Biden will ratchet up rates on goods the US struggled to import during the coronavirus pandemic, and for industries, such as chips and green energy, that he’s sought to bolster since he took office.
“The Chinese government has poured state money into Chinese companies,” Biden said. “China heavily subsidised all these products, pushing Chinese companies to produce far more than the world can absorb and then dumping excess products on the market at unfairly low prices.”
Biden must strike a careful balance. Additional tariffs risk increasing prices for consumers already hurting from inflation, and inspiring the ire of China.
Biden insisted he did not want conflict with China, just “fair competition”. He looked to assuage concerns for US consumers, saying his tariff regime would not restrict the ability of the public to buy the vehicles they want. And he argued his approach was preferable to Trump’s call for across-the-board tariffs on China, which Biden said would drive up costs for American families by US$1,500.
Biden’s changes are staggered to take effect from 2024 to 2026, and are more targeted than the 60 per cent flat tariff Trump has proposed. The biggest jump is for EVs, with the tariff rate quadrupling, while other imports are seeing levies doubled or imposed for the first time. In some cases, the levies apply to areas where China has only a small segment of the US market, but are intended to head off a potential deluge of imports.
Trump, speaking to reporters before entering his criminal trial at a Manhattan courthouse, said Biden needed to expand the additional tariffs to include other products, including conventional cars.
“China is eating our lunch right now and they went away from what I was doing,” Trump said, adding that Biden had been “playing games” with Beijing.
Asked about the lunch comment on Tuesday, Biden said Trump had been “feeding them for a long time”.
“It’s a smart approach,” Biden said. “Compare that to what the prior administration did.”
China blasted the move, urging the US to cancel the new tariffs in a statement from Beijing’s Ministry of Commerce. It vowed to take “resolute measures to safeguard its own rights and interests” but without providing specifics.
Targeted industries
The tariff rate on semiconductors will double from 25 to 50 per cent by 2025, targeting an industry Biden has made a centrepiece of his manufacturing agenda through billions in subsidies to bolster US production. The levies aim to counter China’s rush into so-called legacy chips, older-generation components still essential to the global economy.
Certain critical minerals will see a new 25 per cent tariff this year, while natural graphite and permanent magnets will be hit with that rate in 2026. Ship-to-shore cranes also face a new 25 per cent tariff this year.
The EV tariff takes effect this year, with a final tariff rate of 102.5 per cent, up from 27.5 per cent now. And tariffs on certain steel and aluminium from China – currently facing a 0 per cent or 7.5 per cent tariff – will rise to 25 per cent this year.
Biden’s tariffs will make it easier for the European Union to move to impose import duties on Chinese EVs, according to an analysis from Wolfe Research released on Tuesday.
Tariffs on lithium-ion batteries for EVs, as well as battery parts, will rise to 25 per cent from 7.5 per cent this year, while non-EV lithium-ion batteries make the same jump in 2026.
Although tariffs on solar cells and modules from China will double, Biden is creating a process that could lead to exclusions for key machinery used to manufacture solar components, a move seen as helping nurture a domestic supply chain for the industry.
The US will also impose a new 50 per cent tariff on Chinese syringes and needles this year, while tariffs on personal protective equipment, such as respirators and face masks, rise to 25 per cent from either 0 per cent or 7.5 per cent now. Tariffs on rubber medical and surgical gloves will jump to 25 per cent from 7.5 per cent in 2026.
It’s unclear whether the moves will trigger retaliatory tariffs by China, but the tariff regime proposed under Trump already applies to about US$226 billion worth of goods, according to an administration estimate, based on 2023 data.
“Hopefully we will not see a significant Chinese response – but that’s always a possibility,” Treasury Secretary Janet Yellen said on Monday.
Tuesday’s announcement is the culmination of a mandatory review of Trump’s tariffs that stretched for over a year under the shadow cast by the upcoming election. Both candidates have sought to portray themselves as tough on Beijing with Trump pledging across-the-board tariffs on China.
Biden’s changes do not include any offsetting reductions. An official who briefed reporters ahead of the announcement on condition of anonymity said the US had not seen improvements in many unfair Chinese trade practices, such as forced technology transfers, since the tariffs were first imposed, making reductions unwarranted. BLOOMBERG
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